What is natural capital?

The establishment of “greenbelts” around Canadian cities helps protect ecosystem services.

Trees clean our air and forests and wetlands filter our water. Green urban spaces absorb carbon, cool our cities and protect us from storms, and nature's water ecosystems stabilize the climate, prevent flooding and control the quality of water.

Natural capital refers to the planet's stocks of water, land, air, and renewable and non-renewable resources (such as plant and animal species, forests, and minerals). The term natural capital implies an extension of the economic notion of capital. Just as all forms of capital are capable of providing a flow of goods and services, components of natural capital interact to provide humans and other species with goods and services that are wide-ranging and diverse. The collective benefits provided by the resources and processes supplied by natural capital are known as ecosystem goods and services, or simply ecosystem services. These services are imperative for survival and well-being. They are also the basis for all economic activity.

The services that nature provides for free are often not accounted for and, therefore, not properly valued by decision-makers. We evaluate the benefits that nature provides and calculate the economic cost of these services if we had to provide them ourselves.

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Natural capital in BC's Lower Mainland

It's a first. Our latest report gives economic values for the Lower Mainland's water ecosystems. The Nearshore Natural Capital Valuation report finds that areas such as wetlands and coastal areas give us $30 to $60 billion in benefits every year. As a natural carbon sink, they help reduce our greenhouse gas emissions, while providing natural protection against the increasing intensity of storms worsened by climate change. And they give us tools to protect precious habitat for declining salmon stocks.

This follows 2010's Natural Capital in B.C.'s Lower Mainland which looked at forests, fields, wetlands and waterways and estimated the non-market economic value of these ecosystems at $5.4 billion a year. That's about $2,462 per person each year.

Natural capital in Ontario

Our research estimated that the benefits provided by southern Ontario's greenbelt are valued at at least $2.6 billion annually. Another study estimated the value of the ecosystem goods and services provided by the adjacent Lake Simcoe watershed at almost $1 billion per year.

Natural Capital in Rouge National Park the economic value of ecosystem services from Canada's future Rouge National Park and its surrounding watersheds to be more than $115 million. The report recommends legal, policy and conservation efforts needed to ensure the Rouge's ecological health and economic value are maintained in the long term.
Natural capital globally

At the Rio+20 Summit in 2012, 50 countries joined 39 financial institutions in signing the Natural Capital Declaration committing countries to account for nature's role in the global economy. The United Kingdom is now reporting natural capital and environmental costs as part of GDP reporting.